Ecommerce companies are some of Los Angeles hottest startups.
Companies like GOAT, an online marketplace for sneakerheads, are reeling in cash in a white-hot market. GOAT raised $195 million in a late-stage funding round in June, more than doubling its valuation to $3.7 billion. Tapcart, a Shopify-based mobile app, raised $50 million in a Series B funding round also in June. Popshop Live, a livestream shopping platform, announced a Series A round of funding in July that valued the company at $100 million. Italic, an online retailer that sells luxury goods at cost, had a $26.9 million infusion of cash through an early stage funding round in April.
Venture capitalists poured $384 million into ecommerce companies so far this year, according to PitchBook data, with more money being spent so far in 2021 than all of 2020.
In Los Angeles, where there has always been a healthy amount of ecommerce startups, there's an emerging new evolution with more innovation in the marketplace, investors say.
We asked the region's top VCs in our dot.LA sentiment survey to identify the top L.A.-based ecommerce companies. Here's what they told us, ordered by how often each was mentioned.
Founded in 2015, GOAT has ascended the ranks of L.A.'s startup scene. GOAT hit unicorn status in late 2020, and just about doubled its valuation to $3.7 billion by June this year.
The marketplace platform lets shoe collectors sell and resell shoes and other luxury items. The company sold over $2 billion in merchandise in 2020.
Started by a pair of sneakerheads from UCLA, the company has become a leader in the rising industry of sneaker sales that is projected to rise from $2 billion in global worth to around $30 billion by 2030.
Founded in 2017, Santa Monica-based Tapcart is hoping to ride the wave of online and mobile ecommerce. Its software allows companies to transition Shopify-based stores into mobile apps, and boasts features that drive customer retention.
Tapcart raised $50 million in June. Founded by Eric Netsch and Sina Mobasser, apps created using the SaaS-based service processed over $1.2 billion in sales over the past year.
"The pandemic really just reassured the path that the world was already on," Netsch has told dot.LA. "We knew that mobile was taking the world by storm far before the pandemic happened."
A sudden shift in pandemic-related restrictions lured companies to Popshop's livestreaming platform, allowing Popshop to reach a $100 million valuation by July.
Popshop's app allows stores to livestream from their websites and promote their product. Sales are made directly through the app. The company took inspiration from the Chinese market, where livestream vending platforms was successful, and is hoping the model translates to the U.S. market.
Petra Griffith, managing director of Wedbush Ventures, said she named Popshop Live as one of the most interesting ecommerce companies (that she does not invest in) because of its dynamic founder, Danielle Li.
"I think a lot about commerce and the future of commerce," she said. "You see the popularity in Asia, [where you] have influencers and video and live interaction, kind of like a live QVC that you can interact with is I think is really compelling."
Launched in 2014 as an online-only, direct-to-consumer brand, Parachute began as a high-end bedding company. Since then it has expanded into other home goods products and has opened brick-and-mortar stores across the U.S., including one in Venice and another in Silver Lake.
Ariel Kaye, founder and CEO, launched Parachute's first mattress line in 2019, and the company has created a following among millennials with its bedding and bath linens made from high-quality materials.
Kaye said Parachute's home goods products fared "extremely well" during the pandemic as people spent money to "refresh" or redecorate their living spaces or moved into new homes.
"As a digitally native brand, we were able to meet our customers where they are. We have been very lucky to connect with new and existing customers to offer products as well as services designed to help them enjoy their home," Kaye said in an email.
Founded in 2018, Italic is a subscription based, direct-from-manufacturer company. The Los Angeles-based startup partners with manufacturers that work with big-name luxury brands to offer the same type of goods without the cost of branding.
CEO Jeremy Cai said he doesn't see Italic as a traditional ecommerce company because it takes nearly no inventory risk, but rather makes money when customers buy products, using that to pay the manufacturer and taking a cut of it. He said the business is more oriented toward technology, operations and product development, rather than sales and marketing.
"I think the excitement around our business is that we're fundamentally doing something different from a business standpoint and that we have pretty deep customer loyalty," Cai said.
While Italic is membership based, Cai said the company plans to allow customers who aren't members to make purchases later this year.
"In my mind, the future is really like a bifurcation of value-driven shopping and branded shopping," he said. "What we're mostly focused on is driving value on the product side to the customer."
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GOAT, an online marketplace for sneakerheads, has raised $195 million in a late-stage funding round, more than doubling its valuation to $3.7 billion, the company announced Thursday.
In September, the Los Angeles-based startup was valued at $1.8 billion following its Series E round when it raised $100 million.
The new financing was led by Park West Asset Management, funds and accounts advised by T. Rowe Price Associates, Inc., Franklin Templeton, Adage Capital Management and Ulysses Management.
Launched in 2015 by college friends to "authenticate" used AirJordans and other collectible shoes, GOAT is positioning itself to be a global luxury shoe and apparel retailer. The company said it sold $2 billion in merchandise on its platform last year and that its sneaker sales doubled compared to the previous year.
GOAT said it will use the new funds to further invest in its sneaker business as well as its growing apparel and accessories verticals and to expand into Chicago, China, Japan and Singapore this year. It has 13 fulfillment facilities globally.
"GOAT's growth is accelerating across every channel and category due to the powerful global technology platform we have developed and the premier customer experience we deliver, which resonates with younger consumers around the world," Eddy Lu, co-founder and GOAT Group CEO, said in a statement. "GOAT is creating a leading, highly differentiated luxury and lifestyle brand that is uniquely positioned at the intersection of the primary and resale markets, enabling us to increase our share of a large and expanding total addressable market in our core sneakers business and newer verticals."
As the popularity of streetwear culture has grown, GOAT has become known as a platform where you can buy hard-to-find, authentic sneakers.
The sneaker and streetwear resale market is estimated to be worth more than $2 billion in North America, according to Cowen, and could grow to $30 billion globally by 2030.
The company, which takes its name from the sports acronym for "Greatest of All Time," expanded its online store in 2019 to include new clothes and accessories from luxury brands such as Alexander McQueen and Versace.
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On today's episode of Office Hours, hear from GOAT co-founder and CEO Eddy Lu about big, public — and most importantly, resolved — founder fights, insight on when to know it's time to pivot or quit, how GOAT differentiates itself from other sneaker ecommerce sites — and one of GOAT's early and clever growth hacks that convinced consumers the company had more merch than they actually did.
In fact, the stunt was so good, the company could not meet customer demand, which led to a fair amount of outrage. While the situation was quickly rectified, an advisor shared some sanguine advice: "at this stage in your company's life, it's better to be hated than unknown."
Eddy Lu is a serial entrepreneur and started out at Lehman Brothers. He met his GOAT co-founder, Daishin Sugano, on a basketball court, and together they launched a couple of businesses before landing on GOAT.
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